Allowed housing expenses? The county standard or what you actually pay?

[LadyInTheRed]

btbeme, I agree with you that people should work for a Chap 7 if they can qualify and it suits their purposes. But some people make enough money that all the planning in the world (other than quiting their job or taking a pay cut) won't qualify them for a Chap 7. When you describe a Chap 13 as "endentured servitude", you scare people who are not able to file a Chap 7 and may discourage them them from considering a Chap 13 even though it may be an excellent solution for them. The fear generated by that kind of comment is what inspired my signature. Working to pay off my unsecured debt for the rest of my life felt a lot more like indentured servitude than my Chap 13 does.

[justbroke]

I agree with you, but there are actual and valid reasons to file a Chapter 13 that have nothing to do with a complete liquidation. Sometimes, a sophisticated debtor just needs to reorganize their debts and take advantage of the (up to ) 60 months to repay. It's a strategy.

However, someone with high income, can't just plan to file Chapter 7. Without having serious mortgage payments, or having a very serious business, with business debt and/or serious real estate investments.... it's not that you can "pre-plan" a Chapter 7.

I'm more the Chapter 13 is the right tool for certain tasks. Chapter 7 works for most people, but I couldn't keep my investment properties in a more controlled restructuring of my debt using Chapter 7.

Chapter 13 is a restructuring tool and should be used for the task at hand. Some don't have a simple choice of "planning" to not be in one.

In the end, about 40% of confirmed Chapter 13s make it to discharge.

[btbeme]

Well, even though you make Chapter 13 seem like a death sentence or some sort of slavery, it is a tool for those of us who actually wanted to restructure debt. Of course, I'm not the poster-child for the correct way to use a Chapter 13 Reorganization. I converted to Chapter 7 some 20 months into my confirmed plan.

I simply see Ch 13 as an expensive way to qualify for a Ch 7. What are the statistics of completion of a Ch 13? I have read that it is very low, maybe as low as the teens. Most flip to a Ch 7 along the way.

What I shake my head over are folks who fall into a Ch 13 because of poor pre-filing decisions that could have been easily avoided, or falling through the gaps in the Means Test because they (or their attorney) failed to understand that there are ways to keep most singular events from ditching a Ch 7. Certainly, it has its place, but I'd rather that people go through a few months of pre-filing pain to conform rather than five years of payments on debts they cannot afford anyway. And I'd absolutely rather see people get their Ch 7 discharge rather than a dismissal or Ch 13 from a Trustee for mistakes that could be avoided. That's all.

[justbroke]

Under the median filers don't have to complete the means test, so OP only has to worry about I/J.

mom, you're on top of things! Yes, you do not complete the entire means test. You only complete the top section to figure out that you don't need to fill out the entire form.

[momofthree]

Under the median filers don't have to complete the means test, so OP only has to worry about I/J.

[overthedebt2]

Thank you for all your feedback! I don't know what I'd do without this forum. I wish I found it sooner!

[justbroke]

You would use the allowance on the Means Test. You can use the allowance on Schedule I/J since the Lanning decision says that it's forward looking. I don't think it's reasonable that you pay for a room for your whole life! Besides, you are under-the-median so the Trustee (and UST) aren't really going to be busting your chops over filing Chapter 7 anyhow.

[overthedebt2]

The Mortgage/Rent expense for a family of 2 in Orange County California is $1,671/month. You're saying you can't get a room for $1,671/month. A quick cursory glance shows many apartments in Anaheim for around $1,200-$1,600 for a 2 bedroom. To me, this seems that the United States Trustee's Allowances are in line.

What do you think the allowance is for 2 people in Orange County California?

(FYI: Orange County has the highest allowances for mortgage/rent and non-mortgage/non-rent expense in the entire State of California.)

justbroke,

I pay $850/month to rent a room as a single person. At the time, when I first got my job, that was all I could afford given the expense of servicing all the minimums on my cards. Now that I've stopped paying, I obviously have more disposable income to use towards my own apartment. I saw the allowance before. I was just unsure if they used that standard of $1671 or the $850 I was paying for a single room.

[overthedebt2]

Thanks for all the replies! I really appreciate all the help I've been given in this forum.

[justbroke]

Well, even though you make Chapter 13 seem like a death sentence or some sort of slavery, it is a tool for those of us who actually wanted to restructure debt. Of course, I'm not the poster-child for the correct way to use a Chapter 13 Reorganization. I converted to Chapter 7 some 20 months into my confirmed plan.

[btbeme]

There is no reason an under-the-median income debtor can't pass the Means Test at all. If you are over-the-median, it's a different story. The test was designed to cause the majority of over-the-median debtors to fail with "sufficient" income to fund a Chapter 13.

Exactly. And $58k is well under median for Orange County. Unless the OP give the Trustee a reason to grab his microscope, I would think that any reasonable claim for expenses not exceeding federal standards would be allowable.

I know of several under-median Ch 13 cases where the debtor was either handcuffed or absolutely petulant about a "thing" they could not surrender. Sad., because the slide into BK is generally a fairly gradual one with plenty of time to arrange matters to a more friendly version of debt forgiveness. Endentured servitude for 3-5 years after filing isn't what I had in mind when I heard the words "fresh start"

[justbroke]

I wonder what that italics means?

It is an emphasis that didn't require bold writing. It is pretty good caselaw that Schedule I/J is forward looking, especially after the Lanning decision.

Otherwise, I stand by my maxim - the Means Test is a test to be passed or find a way to pass. If you have to find a way to pass it, make sure your attorney is experienced and informed.

There is no reason an under-the-median income debtor can't pass the Means Test at all. If you are over-the-median, it's a different story. The test was designed to cause the majority of over-the-median debtors to fail with "sufficient" income to fund a Chapter 13.

[btbeme]

Schedule I and J, however, are actual with a slight view towards the future.

I wonder what that italics means?

Unless the difference between what you actually pay given your situation vs. what you would NORMALLY pay is massive, I'd think you are fine to claim the exemption or just south of it. After all, once you stop paying bills 3-4 months before fining, you have the cash to move in to a reasonable place, right? Right?

Excess DMI resulting in a Ch 13 is largely a result of poor planning or some extenuating circumstance where you are unable or unwilling to surrender an asset. Anyone below the median income level who has a valuable Beanie Baby or lunchbox collection they refuse to surrender...we can't help you. Otherwise, Ch 7 is for real. And your life will be better, if you choose. Pretty much starting today.

Otherwise, I stand by my maxim - the Means Test is a test to be passed or find a way to pass. If you have to find a way to pass it, make sure your attorney is experienced and informed.

[justbroke]

Except for on the Means Test. On the Means Test (Form B22A), you use the IRS allowance. Schedule I and J, however, are actual with a slight view towards the future. You could argue that the IRS allowance is in line with what you will be paying in the future view. Of course, an attorney would argue that for you and I don't think you'd get much of an argument from the Trustee.

[momofthree]

You use what you actually pay UP TO the IRS standard. So it's time to get yourself an apartment/house so that you can use the higher rent allowance. Obviously, you don't want to have to list your "room rent" and then end up in a ch.13 due to excess DMI. Do not list the IRS standard when you're paying less though. You will use your actual rental amount.